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Friday, 25 July 2014

image for The life of a pound coin The value of your pound could go up as well as down

In the week when the British economy returns to pre-crisis levels, we take a look at the life of a pound coin during a single week, in an attempt to explain why the British economy manages to be so dynamic.

Our coin's tale begins with George Osbourne, as he spends our taxes to buy a Revolting Peasants cocktail at Jolly Cedric's Wank-Bar For Toffs. 20% of the cost goes to the taxman, so at the point the bar receives it our hypothetical pound is now only worth 80p. The cocktail itself was worth considerably more, but we are only considering the life of a single pound coin.

The bar then pays the barman his wages. As he is on the minimum wage, the first £10,000 of his income is tax free, so he pays an effective rate of 7% tax. The original pound is now worth 74p.

The barman uses his meagre income to buy a £10 bag of heroin from his drug dealer. The taxman is unaware of the activity and takes nothing.

The drug dealer buys a tabloid newspaper from his local newsagent to enjoy the pictures of breasts. As newspapers are VAT free, the government takes nothing.

The newsagent pays the pound (now still worth 74p) to his bank to help pay off his mortgage. There is no tax payable, but the bank effectively doubles its money through interest and re-investment in Ponzi and Reverse Ponzi funds. The pound is now worth £1.48.

The bank pays one of its employees at a tax rate of 35% (the top rate of tax he pays is 40% but much of his income is at a lower rate). Thanks to an offshore pension fund, the banker receives an extra 5% back.

At this point, the pound is again worth what it was worth to begin with. The banker returns to Jolly Cedric's Wank-Bar For Toffs and the circulation of currency begins again.

Throughout the entire cycle, a total of 74p (20+6+48) has been raised by the government in taxes and the pound itself remains in circulation at its original value. This is how the British economy works, where money is taken out of the economy by workers and other parasites, but banks pump in extra magic cash to ensure the economy remains profitable. Drug dealers and newspapermen are economically neutral, which reflects their venerated status among politicians.

In the entire cycle - which only took one week - the pound has contributed its own value towards the British economy 6 times, thereby generating £6 of GDP alongside the 74p of tax.

Hurrah for the British economy!

The story above is a satire or parody. It is entirely fictitious.

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